Bermuda E-commerce Company: A Guide for Non-Resident Owners

Using a Bermuda Company to Run an Online Consumer Business: What Works and What Does NotCopy link to section

The Companies Act 1981 sets the corporate-governance framework, and the Exempted Company is the vehicle used for business directed outside the island. A pure product-selling or marketplace operation is not a regulated activity, so no dedicated e-commerce licence exists.

One structural point matters from the outset. Local law prohibits direct sales by non-Bermudians, and sales representatives must hold a Salesperson's Permit to approach customers on-island.

An offshore seller targeting a global market sidesteps that restriction, since its primary customers are not Bermuda residents. Should the business instead aim at the local consumer market, the restriction becomes a real constraint.

On the positive side, the legal infrastructure is mature, the system is rooted in English common law, and the corporate veil is well maintained. Trading income carries no local profit tax for operators below the multinational threshold.

The drawbacks are concentrated and serious: no native access to Stripe or PayPal for a locally incorporated entity, no usable treaty network for trading income, a full substance test under the "Distribution and Service Centre" classification, and constrained banking for settling e-commerce revenue. Each is examined below.

A 15% corporate income tax applies from 1 January 2025 to entities within multinational groups reporting annual revenue of €750 million or more. A typical small or mid-size online seller falls below that line and is unaffected.

Bermuda's Tax-Neutral Status and What It Means for E-commerce MarginsCopy link to section

For an operator beneath the €750 million group threshold, the headline is clean. No tax falls on profits, income, dividends, or capital gains, and there is no requirement to distribute or cap on accumulating profit.

Distributions out of the company face no local levy. Profits taken home as dividends or director fees attract no withholding at source, which simplifies repatriation for a non-resident owner.

There is also no domestic consumption tax. The company carries no local VAT, GST, or sales-tax filing burden, because none of those systems exist on the island.

Two costs do bite in specific circumstances. If the entity physically imports inventory, customs duty applies at varying rates, most commonly 25%; a dropship or digital model avoids this entirely. If you hire local staff to support substance, payroll tax for an exempted undertaking runs at 10.25% of total employee remuneration.

The decisive tax weakness is the absence of a treaty network. The only double taxation agreement in force is the 1986 agreement with the United States, which entered into force in 1988 and applies solely to insurance enterprises.

That treaty gives an online seller nothing. Where a customer's country withholds tax on royalties, service fees, or other payments to the seller, no agreement reduces it, and the entity has no protection to claim.

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Payment Processing and Merchant Accounts: The Central Challenge for a Bermuda EntityCopy link to section

This is where the model usually fails. A Bermuda-incorporated company cannot open a native Stripe merchant account, because the jurisdiction is not on Stripe's list of supported countries for onboarding.

PayPal is no better for the business side. Bermudians can load and spend through PayPal as buyers, but a local business cannot accept PayPal and move the proceeds home without first opening a US bank account.

The pattern repeats across the market. Square, Venmo, Stripe, and Revolut are reshaping payments elsewhere, yet none are available to Bermudian small businesses for accepting payments, and the jurisdiction has effectively been left out of payments innovation.

The cause is structural, not regulatory. A population near 60,000 ranks low on the priority list of global processors, and building credit-rating and risk systems for so small a market is costly and complex.

Local settlement carries its own friction. Limited competition among domestic banks produces high fees, foreign-exchange handling is awkward for foreign sellers, and there is no local fintech layer to fall back on.

Bank-side controls add further drag. HSBC Bermuda has tightened security where merchants route funds through third-party providers, and some transfers to services such as Revolut and PayPal have been declined.

The common practical answer is to open a US bank account or form a US LLC to reach Stripe and PayPal, then upstream funds to the Bermuda entity. This works mechanically, but it undermines any claim that the Bermuda company is the true merchant and can raise US tax-nexus questions.

Gateway and Platform Acceptance: Stripe, Shopify, PayPal, Amazon, and eBay Seller RequirementsCopy link to section

Each major gateway closes the same door. Stripe does not support the jurisdiction as a merchant registration country, so an entity cannot create an account using a local address and bank account.

Shopify Payments is powered by Stripe and is therefore equally unavailable as a native solution. The practical local alternative is First Atlantic Commerce, a card gateway serving the island and 23 other Caribbean and Atlantic regions with direct Shopify integration.

PayPal's business restriction is unchanged: proceeds cannot reach the company without a US bank account.

Marketplace selling runs into the same disbursement problem. Both Amazon and eBay require a bank account in a supported country for payouts, and the island is not a standard disbursement destination, which in practice points to a US or UK account.

On the buyer side, card acceptance still matters. Visa and Mastercard should sit at the centre of checkout, and Bermuda-issued cards work as a buyer; the gap is entirely on the merchant side.

That merchant-side gap is the single largest operational obstacle to running an online business through this kind of entity without a subsidiary or bank account in a gateway-supported country.

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Where a Bermuda E-commerce Company Can Actually Hold and Move Customer RevenueCopy link to section

Holding revenue is more feasible than collecting it. HSBC Bermuda, Clarien Bank, and Butterfield Bank all offer corporate accounts to exempted companies, though limited competition tends to mean high fees.

Currency risk inside the account is minimal. The Bermuda dollar is pegged one-to-one to the US dollar, so USD balances are stable; converting other currencies through a local bank triggers a foreign-currency purchase tax of 1.25%.

A corporate account here can receive international USD wires from an acquirer or marketplace, which is the most realistic way to hold revenue. The catch is that the payer must support the jurisdiction as a payout destination, and many do not do so natively.

What is missing is the modern multi-currency layer. There is no local fintech infrastructure for small businesses, and platforms such as Wise, Airwallex, and Payoneer do not list the jurisdiction as a supported business registration country for full merchant accounts.

In practice, advisers route collection through a US or EU entity and upstream net profit to the Bermuda parent via management fees or inter-company dividends. The structure functions, but it layers in extra cost and administration.

Sales Tax, VAT, and GST Exposure Created in Your Customers' CountriesCopy link to section

Domestic tax neutrality offers no shield abroad. The entity owes no local VAT, GST, or sales tax, but those obligations are governed entirely by where the customer sits, not by where the company is registered.

Selling digital services to EU consumers is the clearest example. Under EU VAT rules as amended by the 2021 OSS reforms, the consumer's member-state rate applies, and the seller must register through the Import One Stop Shop or in individual countries; no EU VAT agreement reduces this.

Other markets apply the same destination logic with their own thresholds.

The conclusion is uncomfortable but plain. A Bermuda seller carries the same multi-country VAT and GST compliance load as any other foreign seller, with the added disadvantage that no double-tax agreements simplify the treatment.

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Economic Substance Rules and Their Bearing on a Customer-Facing Online SellerCopy link to section

The Economic Substance Act 2018 and accompanying regulations apply here, and they have been operative since 31 December 2018. The Registrar of Companies administers and monitors compliance.

An online business selling goods or services to third parties is most likely a "Distribution and Service Centre," one of the nine listed relevant activities. Core income-generating activities include taking orders, managing stock, and transporting and storing goods, which captures a standard retailer or dropshipper.

This category attracts the full substance test, not the reduced one. An in-scope entity earning revenue from the activity must maintain a genuine economic presence on the island.

Five elements must be satisfied. The company must be managed and directed locally, with strategic decisions made at board meetings held in the jurisdiction, and it must incur adequate local operating expenditure, employ adequate staff, hold physical premises, and conduct its core activity there.

There is no de minimis relief. Any gross revenue from a relevant activity, however small, brings the company into scope.

Each year, an in-scope entity must file an Economic Substance Declaration with the Registrar within six months of its financial year end. Civil penalties reach BD$250,000 in three stages, and continued non-compliance can lead to a court-ordered strike-off; a knowingly false declaration carries penalties up to BD$10,000 or two years' imprisonment.

One escape route exists. A company that demonstrates tax residence elsewhere falls outside these requirements, provided that jurisdiction is not on Annex 1 of the EU list and is not one without an equivalent substance regime.

For a low-margin online business, the arithmetic is the warning sign. Rent, staff, director fees, and payroll tax to build real local presence can consume the tax saving outright. The economic substance guidance sets out how the Registrar assesses adequacy.

Dropshipping and Marketplace Fulfilment: Practical Structuring for a Bermuda BaseCopy link to section

Dropshipping does not avoid the classification. A company acting as merchant of record while a supplier ships directly to customers still falls within the Distribution and Service Centre activity, because order-taking and stock management count as core activity even when physical handling is outsourced.

Outsourcing has limits. Strategic decisions and core income-generating activity must occur on the island, so handing fulfilment to a logistics provider abroad does not, by itself, satisfy the test; the order-management function must remain local.

Marketplace models are exposed here. Where Amazon or another platform handles transport and storage entirely offshore, that core activity happens outside the jurisdiction, and the Registrar may question whether adequate substance exists. The rules allow weight to be given to genuine commercial reasons for cross-border activity, but there is no guarantee this covers pure marketplace fulfilment.

Digital-only sellers face a fork. Software, downloads, or SaaS may sit under Distribution and Service Centre, but if the product is IP-driven it may instead fall under the Intellectual Property activity, which carries the most demanding test. An IP entity is presumed non-compliant unless it shows it makes the strategic decisions, bears the principal risks, and holds adequate staff and premises locally.

The structure advisers reach for separates trading from holding. A Bermuda parent owns a trading subsidiary in a gateway-accessible country such as the UK, Ireland, the US, or Singapore; the subsidiary is the merchant of record and meets its own substance, paying a management fee or royalty upstream. That arrangement creates transfer-pricing and substance duties in the subsidiary's jurisdiction.

Standard fiat e-commerce needs no special licence. Accepting cryptocurrency is different, since the Digital Asset Business Act 2018 and BMA licensing may then apply.

Reputation, Customer Trust, and Country-of-Seller Disclosure on Consumer PlatformsCopy link to section

The compliance reputation is sound. Barbados, Bermuda, and Aruba were removed from the EU list of non-cooperative jurisdictions in May 2019, and the jurisdiction does not appear on the current list of 11 named countries.

It is also clear of the FATF lists, with only North Korea, Iran, and Myanmar on the blacklist as of February 2026. The OECD Global Forum rates the jurisdiction "Largely Compliant," which supports correspondent-banking relationships.

Buyer perception is a separate matter. Consumers associate the name with offshore finance rather than order fulfilment, and a Bermuda seller address on Amazon, eBay, Etsy, or a Shopify store can raise trust questions and complicate buyer-protection disputes.

Disclosure rules add friction. Amazon and eBay require a valid business address, and a registered-office address at a law firm or corporate service provider may trigger policy reviews when it does not match where fulfilment and customer service actually happen.

Chargebacks are the sharper problem. Card networks expect a merchant to hold an acquiring relationship in its operating jurisdiction, and an entity without a local acquirer cannot dispute chargebacks through the standard process.

When Bermuda Is the Wrong Home for an E-commerce Business and Common WorkaroundsCopy link to section

For an operating e-commerce entity, this is a weak fit, and three factors drive that judgment.

• Gateway exclusion is decisive. With Stripe, PayPal, Square, Venmo, and Revolut all closed to local businesses, the entity cannot serve as merchant of record in the normal stack.
• No usable treaty network. The only agreement is the insurance-specific US treaty, so withholding on cross-border service payments or royalties cannot be reduced.
• Substance cost outruns the saving. Real headcount, premises, and local board meetings, layered on 10.25% payroll tax and a high cost of living, can exceed the tax benefit for any business below roughly USD 5 to 10 million in profit.

Several workarounds are used in practice:

1. Holding company above a trading subsidiary. The parent holds IP or equity while a UK Ltd, Irish DAC, Singapore Pte, or US LLC acts as merchant of record with native gateway access, with fees or royalties flowing up subject to transfer pricing.
2. US payment layer. The parent opens a US bank account or forms a US LLC purely to reach US payment rails, then sweeps funds home.
3. Re-domicile the trading entity. Ireland, Estonia, the UK, Singapore, or New Zealand offer native Stripe access, settled VAT/GST frameworks, and treaty networks, with Bermuda dropped or kept only as a passive IP holder.
4. Crypto-native route. A platform accepting digital assets could legitimately use a DABA-licensed structure, though this is a specialist niche rather than a general solution.
5. Pure equity holding. As a holding entity whose sole function is owning controlling shares and carrying on no other commercial activity, the company sits under the reduced substance test and never touches revenue.

The Carey Olsen substance guide sets out how each of these classifications is assessed.

ConclusionCopy link to section

Treat this jurisdiction as a holding layer, not a shopfront. The tax neutrality is real, but an online seller that tries to be the merchant of record here runs straight into closed payment gateways, no treaty relief, and a full substance test whose cost can swallow the saving on anything but large profits.

The question to settle before going further is where collection and fulfilment will genuinely sit, because that decision, not the Bermuda incorporation, determines whether the structure works at all.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship helps foreign owners assess honestly whether the Bermuda entity should operate an online business or sit above a trading company elsewhere, and then implements whichever route fits. The same team handles the wider needs of a foreign-owned company on the island, from formation through ongoing obligations.

• Incorporating an Exempted Company under the Companies Act 1981
• Providing registered agent and registered office services
• Supporting economic-substance classification and tax registration
• Managing annual filings and ongoing compliance, including the Economic Substance Declaration
• Handling accounting and bookkeeping for the entity
• Introducing local corporate banking and structuring the payment layer

To discuss a structure suited to your online business, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section